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Big Banks May Offer Credit Cards to Consumers With Little Credit

The new program would give lower-income Americans an alternative to payday loans

By Penelope Wang


Illustration of a person holding a large credit card.

Americans with little or no credit history may soon be eligible to get a credit card from some of the nation’s biggest banks.

A group led by JPMorgan Chase is working on a pilot project to offer credit cards to customers based on how well they manage their bank account rather than their record of paying back loans and other debts. 

The program could offer an alternative way for lower-income Americans to borrow money instead of using so-called payday loans, which charge high interest rates to those with little credit. It could also help customers establish a credit history, so they could be eligible for other types of borrowing, such as a home mortgage.

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More than 50 million Americans currently have little or no credit history, a group called credit invisibles. Many in this group are Black and Hispanics, according to data from the Consumer Financial Protection Bureau (PDF).


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Under the program, banks would analyze their customers’ deposit account information rather than credit scores to determine whether they’re likely to be financially responsible.

JPMorgan is expected to be the first bank to offer credit cards to applicants using this alternate method. Consumers may be able to apply for these cards as early as the fall, and the data would be reported to all three credit bureaus. The bank is not yet releasing any details about credit limits or interest rates.

This initiative emerged from a meeting held by the Office of the Comptroller of the Currency, the federal bank regulator, which convened industry leaders and nonprofit executives to develop programs for increasing credit access to disadvantaged communities.

Other financial institutions have already launched programs aimed at helping consumers who’ve been shut out of the credit system. But those programs have mostly been niche offerings, says Ted Rossman, senior industry analyst at, a credit card comparison website.

“It will be harder for big banks like Chase to move the needle in this market, but it may help banks reach new, loyal customers with cross-selling potential,” Rossman says.

Consumer Privacy Concerns

Consumer advocates are taking a cautious view of the initiative.

“The credit card offering may help some consumers who don’t have a credit score, but we don’t have enough details on how these programs will work,” says Syed Ejaz, policy analyst at Consumer Reports.

Ejaz says the sharing of financial data among the banks raises privacy concerns, particularly with regard to how those with a poor credit history are labeled. Using deposit-level data may also highlight the impact of overdraft fees, which often hit low-income consumers hardest.

“While this effort does help inclusion and is better than no effort, there are some downsides,” says Chi Chi Wu, a staff attorney at the National Consumer Law Center who specializes in credit issues.  

Most significantly, Wu is concerned that the program does not offer enough control to consumers whose cash flow data would be available by default to underwriters.

Some advocates would prefer an opt-in option allowing users to choose whether they want to give underwriters access to their banking data.

Building a Credit Score

There are options now for consumers to get credit cards and build a credit history, though the process generally takes time.

So don’t wait for the big banks to establish a credit history or improve your score. You can check into one of the programs mentioned above, or follow this advice from experts.

For access to credit cards, consider Petal and Tomo, which already use alternative data, such as bank account records, for those with no credit history.

Credit companies also offer credit-building options using alternative data. Experian Boost counts your utility payments toward your Experian FICO Score. Another program, eCredable Lift, allows you to add utility and phone payments to your TransUnion credit report.

But for those unfamiliar with credit, you need to take extra care in managing your accounts to ensure on-time payments and avoid dinging your score, says John Ulzheimer, a credit expert. The last thing you want is to further derail your access to credit.

—Octavio Blanco contributed to this article.

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